Gujarat High Court
The Surat Municipal Corporation vs The Commissioner Of Central Excise & ... on 10 August, 2016
Author: K.S.Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/1279/2006 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 1279 of 2006
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI SD/-
and
HONOURABLE MR.JUSTICE G.R.UDHWANI SD/-
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1 Whether Reporters of Local Papers may be allowed YES
to see the judgment ?
2 To be referred to the Reporter or not ? NO
3 Whether their Lordships wish to see the fair copy of NO
the judgment ?
4 Whether this case involves a substantial question of NO
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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THE SURAT MUNICIPAL CORPORATION.....Appellant(s)
Versus
THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS,....Opponent(s)
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Appearance:
MR PARESH M DAVE, ADVOCATE for the Appellant(s) No. 1
MS AVANI S MEHTA, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
Date : 10/08/2016
ORAL JUDGMENT
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HC-NIC Page 1 of 8 Created On Sat Aug 13 02:34:07 IST 2016 O/TAXAP/1279/2006 JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal, the appellant - Surat Municipal Corporation has challenged the final order No.120/2006Cus passed by the Customs, Excise & Service Tax Appellate Tribunal, New Delhi in Appeal No.ST/87/05NB(A) whereby the appeal of the assessee came to be dismissed and order passed pursuant to the showcause notice annexed at AnnexureE was confirmed.
2. The case of the assessee is that the assessee is the local authority established under the Bombay Provincial Municipal Corporation Act, 1963 within the local area of Surat City and the activities are carried out for the public purpose and not for the profit purpose. It is the case of the assessee that while providing certain services for public function, Mandaps were supplied in the public hall and auditorium hall which are owned by the Corporation. It is the case of the appellant that since last three decades the appellant has been maintaining and looking after various halls and stadiums, details of which are given as under:
Sr. Name of Mandap
No.
1 Gandhi Smruti Bhavan
2 Indoor Stadium
3 Sardar Patel Smrtu Bhavan
4 Rang Upavan
5 Bhastan Community Hall
6 Dr. Ambedkar Hall, Udhna
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O/TAXAP/1279/2006 JUDGMENT
2.1 It is the case of the appellant that the
Central Government brought under the Service Tax net services of "mandap keeper" as defined under Section 65 (67) of the Finance Act, 1994, as well as, the appellant also got service tax registration as a mandap keeper. It is the case of the appellant that appellant has also been filing quarterly returns in Form ST3 and paying service tax on the monies charged and received by it for providing services as a mandap keeper. The returns have also been accepted by the proper Central Excise Officers and the amounts was paid as service tax by the appellant.
2.2 It is the case of the appellant that a show cause notice dated 14/10/2002 came to be issued by the Joint Commissioner of Central Excise and Customs, Surat1 whereby alleging that taxable service for the period from 01/07/1997 to 31/03/2002 had escaped assessment as regards payment because the amount of gross receipts shown in the balancesheet for the above mandaps was higher than the amount declared in the returns on which the appellant had paid service tax.
2.3 The reply was filed, written submissions were made and ultimately the Additional Commissioner passed OIO confirming the demand of Rs.15,41,715/ alongwith penalty of equal amount of Rs.15,41,715/ and interest on the above amount of service tax.
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O/TAXAP/1279/2006 JUDGMENT
2.4 The appeal was filed by the assessee with
stay application before the Commissioner (Appeals) who has confirmed the demand of Rs.14,92,281/ reducing from Rs.15,41,715/ alongwith penalty of RS.100/ per day of delay under Section 78 with interest of service tax.
2.5 The appellantassessee thereafter filed an appeal before the Appellate Tribunal, New Delhi which came to be decided by final order dated 28/02/2006 confirming the demand of service tax but setting aside the penalty on the ground that the appellant being a statutory Government body and being under a bona fide belief that there was no liability to pay service tax, penalty was not justified which has given rise to this appeal.
3. While admitting this appeal, following question of law has arisen for consideration of this Court:
"(a) Whether confirmation of demand of service tax against the appellant for the period from July 1997 to March 2002 invoking extended period of limitation was legally correct and sustainable ?
(b) Whether confirmation of demand of service tax on use of Auditoriums, etc. for functions like Sports, Meet, Garba for Mataji etc. was legally correct and sustainable?"Page 4 of 8
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4. Learned Counsel Mr.Paresh Dave appearing for the appellant has drawn attention of this Court to Section 73 of the Finance Act which provides for service of a notice within six months, or five years, as the case may be. He has also drawn attention of this Court to Section 73(a) which covers cases where there was omission of failure on the part of the assessee to make a return for any quarter or to disclose wholly or truly all material facts necessary for amendment for any quarter.
4.1 He has further contended that for the time the information which was sought for on 07/11/20001 which was responded on 27/05/2002 and therefore the case of the appellant not would fall under Section 73
(a) of the Act. He has also taken us to Section 71 which provides for verification of tax assessed by the assessee, etc and contended that details were given but the under bona fide belief they have not paid the tax.
4.2 He has also taken us to the reply to the showcause notice wherein he has stated in paragraph 11 that the officers have during this discussion gave them to understand that there is no Service Tax liability on cultural and entertainment programmes as these programmes are for the purpose of public welfare. He has also taken us to the reply dated 21/02/2004 submitted by the appellant and contended that the different contentions were raised and Page 5 of 8 HC-NIC Page 5 of 8 Created On Sat Aug 13 02:34:07 IST 2016 O/TAXAP/1279/2006 JUDGMENT thereafter the order came to be passed at AnnexureC. He has also contended that the reasons given by the authority in the impugned order establishes that it was fall under Section 73(a); whereas in fact the case would fall under Section 73(b).
4.3 After making the aforesaid submissions, he has contended that the order passed by the Tribunal is not just and proper and therefore the same may be quashed and set aside.
5. On the other hand, Ms.Avni Mehta learned Counsel for the respondent has contended that in view of nonsupply of information in time the tribunal has rightly passed the impugned order and therefore this Court may not interfere with the same.
6. At the outset, it is required to be noted that learned Counsel for the appellant does not press for question No.(b). Accordingly, we would not answer the question No.(b) and stands concluded as not pressed.
7. Now, so far as question No.(b) is concerned, having heard the learned Counsel for the parties and having gone through the impugned notice, reply and counterreply, the facts which are emerging from record are that the assessee filed its return, however under the bonafide belief they have not paid paid service tax for certain activities and therefore the case would fall under Section 73(b) of the Act. It is Page 6 of 8 HC-NIC Page 6 of 8 Created On Sat Aug 13 02:34:07 IST 2016 O/TAXAP/1279/2006 JUDGMENT also required to be noted that the Tribunal has also not rendered any findings so far as the appellant had not paid the service tax on the amounts disputed and he was under the bona fide impression that the halls were not fallen under the levy of service tax where certain kind of activities were to be held and therefore also it cannot be said that the appellant has deliberately evaded the service tax.
8. As stated earlier the information was sought for under Section 71 of the Act and if such information was not supplied then the case would fall under Section 73(a), but the demand was called for in the year 2001 and on the basis of the information supplied, showcause notice came to be issued and thus the case of the assessee would not fall under Section 73(a) and it would fall under Section 73(b) of the Act. In the opinion of this Court, the tribunal has committed serious error by not considering the submissions made by the appellant.
9. In view of the aforesaid discussion, present appeal deserves to be allowed and the same is allowed. The question No.(b) raised in this appeal is answered in favour of the appellant and against the department.
(K.S.JHAVERI, J.)
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(G.R.UDHWANI, J.)
sompura
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